Stock Markets End Week Down On Goldman Sachs Lawsuit, Ending Longest Winning Streak Of The Year
DailyMarkets.com (New York) – The effects of the SEC lawsuit brought against Goldman Sachs (NYSE:GS) have been felt across US stock markets, pushing the S&P 500 to end the week lower, and erasing gains seen earlier in the week from positive earnings of companies like Intel (NASDAQ:INTC) and JP Morgan (NYSE:JPM). This brings a much needed to correction to a nearly uninterrupted 7 week rally. The S&P 500 fell 0.2% this week while the Dow managed to hold on to its gains and ended up 0.2% for the week and the Nasdaq managed to end the week up 1.1%.
Goldman Sachs fell 13% on Friday and 10% for the week, the biggest drop in over a year, as the Securities and Exchange Commission sued them over misstating and omitting facts in a CDO that lost investors over $1billion. This law suit comes as President Obama seeks to bring a much needed overhaul to the financial industry. There are rumors that Goldman Sachs was warned about this lawsuit as early as 9 months ago, and the fact that it didn’t make this information public may be grounds for a shareholder lawsuit in the future. Investors are also concerned that other financial institutions could be targets of law suits, and that has pulled the entire financial sector lower.
Airlines are another sector to keep a close eye on as they lose an estimated $200 million a day due to the volcanic eruption in Iceland which has halted air traffic throughout much of Europe. It is still too early to say what the total losses will look like as it could be several days before normal air traffic can be restored, and all of this depends on the unpredictability of nature. One thing is certain, for a sector that has already been suffering from a myriad of problems ranging from high oil prices to the economic crisis, it will be one more blow to their hopes of recovery.
The Goldman debacle, the continued credit risk of Greece, and concerns about the measures China would take to prevent its economy from overheating, all played a part in pushing the Yen up against the US Dollar, Euro, and other major currencies. Both the New Zealand and Australian Dollar were adversely affected, as investors were concerned about carry trade liquidation, and any slowing commodities demand from China.
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There should be an investigation for however long it takes to unravel all of the malfeasance that has infected financial markets, banks, and governments, and then everyone who participated in the swindle should be dealt with accordingly, and never ever be allowed to work in any financial capacity again.
If this isn’t done, the same things will go on and on and next time will be worse at some magnitude of calculation that we don’t yet know. It’s time for everyone who participated to take responsibility and to reap their punishment.
If not, no one can ever again trust bankers, financial markets, financial analysts, governments, or any other fundamental part of the world financial system.
Perhaps even if investigation, arrests, conviction, punishments, and etc. occur, which seems unlikely, no one SHOULD ever trust again. If everyone turns away from gambling their dollars in what turns out to be cesspools of corruption, everyone would be better off.